Annualized funding rates of around 100% in BTC and altcoin perpetual futures markets raise the risk of sharp price pullbacks, some analysts said.) and the broader crypto market are witnessing strong demand for bullish leveraged plays, a sign the market is overheated. While market makers' hedging is likely to keep BTC supported at around $100,000, the heightened activity raises the risk of pullbacks for other cryptocurrencies.
The breakout sent traders chasing the price rally, pushing funding rates for perpetual futures skywards, a sign of growing demand for and overcrowding in long positions. In this scenario, a slight pullback can result in large liquidations and increased downside volatility. "BTC can be stable at around $100,000 in the short-term, helped by the hedging activity of market makers," Ardern told CoinDesk. "This support from the options market may offset the impact of deleveraging to a certain extent."